Bill was revised, but issues remain

March 5, 2013

A resolution on Tiffin City Council's agenda Monday night expresses strong opposition to House Bill 5, a proposal to make municipal income tax procedures uniform across the state.

The resolution is similar to one considered last year, which opposed House Bill 601. But then, the old bill is similar to the new version.

Now, as then, the intent of the legislation is laudable. Uniformity would make it easier for businesses to pay municipal taxes. It might even make Ohio a less-unattractive place to locate a business.

If that sounds like a less-than-enthusiastic claim, consider this: Ohio Society of CPAs states just nine other states have cities that assess and collect municipal income tax. And none of them has the variety among municipal income tax jurisdictions as we have in Ohio.

Thus, lessening the burden that companies doing business in multiple communities face in complying with a patchwork of local income taxes would help. But those same municipalities have legitimate concerns with House Bill 5.

Chief among them is the possibility many would lose revenue with the switch. That is especially tough now, after cities and villages spent a couple years dealing with cuts in local government funding and estate taxes.

Another worry is whether the bill is a step toward state collection of municipal income taxes. The proposed law would establish a Municipal Tax Policy Board, which would craft all tax forms, policies, instructions, enforcement actions and publications.

A boost in local government funding could neutralize the bill's impact on local budgets. And the proposal could be amended to clarify cities and villages would be in charge of their tax collections.

Until those two issues are resolved, local officials should continue to oppose the new bill just the same.